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Double Taxation Avoidance Agreement

between
Malaysia and Mauritius
Effective January 1, 1991

This document was downloaded from ASEAN Briefing (www.aseanbriefing.com) and was compiled by
the tax experts at Dezan Shira & Associates (www.dezshira.com).

Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate
establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and
financial review services to multinationals investing in emerging Asia.
P.U. (A) 14/1993
Signed: 23 August 1992
Effective Date: 1 January 1991

AGREEMENT BETWEEN THE GOVERNMENT OF MALAYSIA AND THE


GOVERNMENT OF MAURITIUS FOR THE AVOIDANCE OF DOUBLE
TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT
TO TAXES ON INCOME

THE GOVERNMENT OF MALAYSIA


AND
THE GOVERNMENT OF MAURITIUS

DESIRING to conclude an Agreement for the avoidance of double taxation and


the prevention of fiscal evasion with respect to taxes on income, have agreed as
follows:

Article 1
PERSONAL SCOPE

This Agreement shall apply to persons who are residents of one or both of the
Contracting States.

Article 2
TAXES COVERED

1. This Agreement shall apply to taxes on income imposed by a Contracting


State, irrespective of the manner in which they are levied.

2. The taxes which are the subject of this Agreement are:

(a) in Malaysia:

(i) the income tax;

(ii) the supplementary income tax, that is, development tax; and

(iii) the petroleum income tax,

(hereinafter referred to as "Malaysian tax");

(b) in Mauritius, the income tax,

(hereinafter referred to as "Mauritius tax tax").


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3. The Agreement shall also apply to any identical or substantially similar taxes
on income which are imposed after the date of signature of this Agreement in
addition to, or in place of, the existing taxes. The competent authorities of the
Contracting States shall notify each other of important changes which have been
made in their respective taxation laws.

Article 3
GENERAL DEFINITIONS

1. In this Agreement, unless the context otherwise requires:

(a) the term "Malaysia" means the territories of the Federation of Malaysia,
the territorial waters of Malaysia and the sea-bed and subsoil of the
territorial waters, and includes any area extending beyond the limits of
the territorial waters of Malaysia, and the seabed and subsoil of any such
area, which has been or may hereafter be designated under the laws of
Malaysia as in accordance with international law as an area over which
Malaysia has sovereign rights for the purposes of exploring and
exploiting the natural resources, whether living or non-living;

(b) the term "Mauritius" means all the territories, including all the islands,
which, in accordance with the laws of Mauritius, constitute the State of
Mauritius and includes:

(i) the territorial sea of Mauritius; and

(ii) any area outside the territorial sea of Mauritius which in accordance
with international law has been or may hereafter be designated,
under the laws of Mauritius relating to the Continental Shelf, as an
area within which the rights of Mauritius with respect to the sea bed
and sub-soil and their natural resources may be exercised;

(c) the terms "a Contracting State" and "the other Contracting State" mean
Malaysia or Mauritius as the context requires;

(d) the term "person" includes an individual, a company and any other body
of persons which is treated as a person for tax purposes;

(e) the term "company" means any body corporate or any entity which is
treated as a body corporate for tax purposes;

(f) the terms "enterprise of a Contracting State" and "enterprise of the other
Contracting State" mean respectively an enterprise carried on by a
resident of a Contracting State and an enterprise carried on by a resident
of the other Contracting State;

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(g) the term "tax" means Malaysian tax or Mauritius tax, as the context
requires;

(h) the term "national" means:

(i) any individual possessing the nationality or citizenship of a


Contracting State;

(ii) any legal person, partnership, association and any other entity
deriving its status as such from the laws in force in a Contracting
State;

(i) the term "international traffic" means any transport by a ship or aircraft
operated by an enterprise of a Contracting State, except when the ship
or aircraft is operated solely between places in the other Contracting
State;

(j) the term "competent authority" means:

(i) in the case of Malaysia, the Minister of Finance or his authorised


representative; and

(ii) in the case of Mauritius, the Minister of Finance or his authorized


representative.

2. In the application of the Agreement by a Contracting State, any term not


defined therein shall, unless the context otherwise requires, have the meaning
which it has under the laws of that State concerning the taxes to which the
Agreement applies.

Article 4
RESIDENT

1. For the purposes of this Agreement, the term "resident of a Contracting State"
means:

(a) in the case of Malaysia, a person who is resident in Malaysia for the
purposes of Malaysian tax; and

(b) in the case of Mauritius, a person who is resident in Mauritius for the
purposes of Mauritius tax.

However, the term "resident of a Contracting State" does not include any person
who is liable to tax in that State in respect only of income from sources in that
State.

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2. Where by reason of the provisions of paragraph 1, an individual is a resident of


both Contracting States, then his status shall be determined in accordance with
the following rules:

(a) he shall be deemed to be a resident of the Contracting State in which he


has a permanent home available to him. If he has a permanent home
available to him in both Contracting States, he shall be deemed to be a
resident of the Contracting State with which his personal and economic
relations are closer (centre of vital interests);

(b) if the Contracting State in which he has his centre of vital interest cannot
be determined, or if he has not a permanent home available to him in
either Contracting State, he shall be deemed to be a resident of the
Contracting State in which he has an habitual abode;

(c) if he has an habitual abode in both Contracting States or in neither of


them, he shall be deemed to be a resident of the Contracting State of
which he is a national;

(d) if he is a national of both Contracting States or of neither of them, the


competent authorities of the Contracting States shall settle the question
by mutual agreement.

3. Where, by reason of the provisions of paragraph 1, a person other than an


individual is a resident of both Contracting States, then it shall be deemed to be a
resident of the Contracting State in which its place of effective management is
situated.

Article 5
PERMANENT ESTABLISHMENT

1. For the purposes of this Agreement, the term "permanent establishment"


means a fixed place of business through which the business of an enterprise is
wholly or partly carried on.

2. The term "permanent establishment" shall include especially:

(a) a place of management;

(b) a branch;

(c) an office;

(d) a factory;

(e) a workshop;

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(f) a mine, an oil or gas well, a quarry or any other place of extraction of
natural resources including timber or other forest produce;

(g) a farm or plantation;

(h) a building site, construction or installation or assembly project, or


supervisory activities in connection therewith, constitutes a permanent
establishment only if the site, project or activity lasts more than six
months.

3. Notwithstanding the preceding provisions of this Article, the term "permanent


establishment" shall be deemed not to include:

(a) the use of facilities solely for the purpose of storage, display or delivery
of goods or merchandise belonging to the enterprise;

(b) the maintenance of stock of goods or merchandise belonging to the


enterprise solely for the purpose of storage, display or delivery;

(c) the maintenance of a stock of goods or merchandise belonging to the


enterprise solely for the purpose of processing by another enterprise;

(d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise or of collecting information, for the
enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of
advertising, for the supply of information, for scientific research or for
similar activities which have a preparatory or auxiliary character, for the
enterprise;

(f) the maintenance of a fixed place of business solely for any combination
of activities mentioned in sub-paragraphs (a) to (e), subject to the overall
activity of the fixed place of business resulting from this combination
being of a preparatory or auxiliary character.

4. A person (other than a broker, general commission agent or any other agent of
an independent status to whom paragraph 5 applies) acting in a Contracting
State on behalf of an enterprise of the other Contracting State shall be deemed
to be a permanent establishment in the first-mentioned State, if:

(a) he has, and habitually exercises in that first- mentioned State, an


authority to conclude contracts in the name of the enterprise, unless his
activities are limited to the purchase of goods or merchandise for the
enterprise;

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(b) he has no such authority, but habitually maintains in that firstmentioned


State a stock of goods or merchandise belonging to the enterprise from
which he regularly delivers goods or merchandise on behalf of the
enterprise; or

(c) he manufactures or processes in the first-mentioned State for the


enterprise goods or merchandise belonging to the enterprise.

5. An enterprise of a Contracting State shall not he deemed to have a permanent


establishment in the other Contracting State merely because it carries on
business in that other State through a broker, general commission agent or any
other agent of an independent status, where such persons are acting in the
ordinary course of their business. An agent shall not be regarded as of an
independent status if he acts exclusively or almost exclusively for the enterprise.

6. The fact that a company which is a resident of a Contracting State controls or


is controlled by a company which is a resident of the other Contracting State, or
which carries on business in that other State (whether through a permanent
establishment or otherwise), shall not of itself constitute either company a
permanent establishment of the other.

Article 6
INCOME FROM IMMOVABLE PROPERTY

1. Income derived by a resident of a Contracting State from immovable property


situated in the other Contracting State may be taxed in that other State.

2. For the purposes of this Agreement, the term "immovable property" shall be
defined in accordance with the laws of the Contracting State in which the
property in question is situated. The term shall in any case include property
accessory to immovable property, livestock and equipment used in agriculture
and forestry, rights to which the provisions of general law respecting landed
property apply, usufruct of immovable property and rights to variable or fixed
payments as consideration for the working of, or the right to work, mineral
deposits, oil or gas wells, quarries and other places of extraction of natural
resources including timber or other forest produce. Ships, boats and aircraft shall
not be regarded as immovable property.

3. The provisions of paragraph 1 shall apply to income derived from the direct
use, letting, or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 shall also apply to the income from
immovable property of an enterprise and to income from immovable property
used for the performance of independent personal services.

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Article 7
BUSINESS PROFITS

1. The profits of an enterprise of a Contracting State shall be taxable only in that


State unless the enterprise carries on business in the other Contracting State
through a permanent establishment situated therein. If the enterprise carries on
business as aforesaid, the profits of the enterprise may be taxed in the other
State but only on so much thereof as is attributable to that permanent
establishment.

2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting


State carries on business in the other Contracting State through a permanent
establishment situated therein, there shall in each Contracting State be attributed
to that permanent establishment the profits which it might be expected to make if
it were a distinct and separate enterprise engaged in the same or similar
activities under the same or similar conditions and dealing wholly independently
with the enterprise of which it is a permanent establishment.

3. In determining the profits of a permanent establishment, there shall be allowed


as deductions all expenses of the enterprise which are incurred for the purposes
of the permanent establishment, including executive and general administrative
expenses so incurred, whether in the Contracting State in which the permanent
establishment is situated or elsewhere. However, no such deduction shall be
allowed in respect of amounts, if any, paid (otherwise than towards
reimbursement of actual expenses) by the permanent establishment to the head
office of the enterprise or any of its other offices, by way of royalties, fees or
other similar payments in return for the use of patents or other rights, or by way
of commission for specific services performed or for management, or, except in
the case of a banking enterprise, by way of interest on moneys lent to the
permanent establishment. Likewise no account shall be taken, in determining the
profits of a permanent establishment, of amounts charged (otherwise than
towards reimbursement of the actual expenses), by the permanent establishment
to the head office of the enterprise or any of its other offices, by way of royalties,
fees or other similar payments in return for the use of patents or other rights, or y
way of commission for specific services performed or for management, or, except
in the case of a banking enterprise, by way of interest on moneys lent to the head
office of the enterprise or any of its other offices.

4. Insofar as it has been customary in a Contracting State to determine the profits


to be attributed to a permanent establishment on the basis of an apportionment
of the total profits of the enterprise to its various parts, nothing in paragraph 2 of
this Article shall preclude that Contracting State from determining the profits to be
taxed by such an apportionment as may be customary, the method of
apportionment adopted shall, however, be such that the result shall be in
accordance with the principles contained in this Article.

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5. No profits shall be attributed to a permanent establishment by reason of the


mere purchase by that permanent establishment of goods or merchandise for the
enterprise.

6. For the purposes of the preceding paragraphs, the profits to be attributed to


the permanent establishment shall be determined by the same method year by
year unless there is good and sufficient reason to the contrary.

7. Where profits include items of income which are dealt with separately in other
Articles of this Agreement, then the provisions of those Articles shall not be
affected by the provisions of this Article.

Article 8
SHIPPING AND AIR TRANSPORT

1. Profits derived by an enterprise of a Contracting State from the operation of


ships or aircraft in international traffic shall be taxable only in that State.

2. Paragraph 1 shall also apply to the share of the profits from the operation of
ships or aircraft derived by a resident of a Contracting State through participation
in a pool, a joint business or an international operating agency.

Article 9
ASSOCIATED ENTERPRISES

Where --

(a) an enterprise of a Contracting State participates directly or indirectly in the


management, control or capital of an enterprise of the other Contracting State, or

(b) the same persons participate directly or indirectly in the management, control
or capital of an enterprise of a Contracting State and an enterprise of the other
Contracting State, and in either case conditions are made or imposed between
the two enterprises in their commercial or financial relations which differ from
those which would be made between independent enterprises, then any profits
which would, but for those conditions, have accrued to one of the enterprises,
but, by reason of those conditions, have not so accrued, may be included in the
profits of that enterprise and taxed accordingly.

Article 10
DIVIDENDS

1. Dividends paid by a company which is a resident of a Contracting State to a


resident of the other Contracting State may be taxed in that other State.

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2. However, such dividends may also be taxed in the Contracting State of which
the company paying the dividends is a resident and according to the laws of that
State, but if the recipient is the beneficial owner of the dividends, the tax so
charged shall not exceed:

(a) five per cent of the gross amount of the dividends if the beneficial owner
is a company (other than a partnership) which controls, directly or
indirectly at least ten per cent of the voting power in the company paying
the dividends;

(b) fifteen per cent of the gross amount of the dividends in all other cases.

This paragraph shall not affect the taxation of the company in respect of the
profits out of which the dividends are paid.

3. Dividends paid by a company which is a resident of Malaysia to a resident of


Mauritius who is the beneficial owner thereof shall be exempt from any tax in
Malaysia which is chargeable on dividends in addition to the tax chargeable in
respect of the income of the company. Nothing in this paragraph shall affect the
provisions of the Malaysian law under which the tax in respect of a dividend paid
by a company which is a resident of Malaysia from which Malaysian tax has
been, or has been deemed to be, deducted may be adjusted by reference to the
rate of tax appropriate to the Malaysian year of assessment immediately
following that in which the dividend was paid.

4. The term "dividends" as used in this Article means income from shares or
other rights, not being debt-claims, participating in profits, as well as income from
other corporate rights which is subjected to the same taxation treatment as
income from shares by the laws of the State of which the company making the
distribution is a resident.

5. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner
of the dividends, being a resident of a Contracting State, carries on business in
the other Contracting State, of which the company paying the dividends is a
resident, through a permanent establishment situated therein, and the holding in
respect of which the dividends are paid is effectively connected with such
permanent establishment. In such a case, the provisions of Article 7 shall apply.

6. Where a company which is a resident of a Contracting State derives income or


profits from the other Contracting State, that other State may not impose any tax
on the dividends paid by the company to persons who are not residents of that
other State, or subject the company's undistributed profits to a tax on
undistributed profits, even if the dividends paid or the undistributed profits consist
wholly or partly of income or profits arising in such other State.

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Article 11
INTEREST

1. Interest arising in a Contracting State and paid to a resident of the other


Contracting State may be taxed in that other State.

2. However, such interest may be taxed in the Contracting State in which it


arises, and according to the laws of that State, but if the recipient is the beneficial
owner of the interest, the tax so charged shall not exceed fifteen percent of the
gross amount of the interest.

3. Notwithstanding the provisions of paragraph 2, interest to which a resident of


Mauritius is beneficially entitled shall be exempt from Malaysian tax if the loan or
other indebtedness in respect of which the interest is paid is an approved loan as
defined in section 2(1) of the Income Tax Act, 1967 of Malaysia

4. Notwithstanding the provisions of paragraphs 2 and 3, the Government of a


Contracting State shall be exempt from tax in the other Contracting State in
respect of interest derived by the Government from that other State.

5. For the purposes of paragraph 4, the term "Government":

(a) in the case of Malaysia means the Government of Malaysia and shall
include:

(i) the governments of the States;

(ii) the local authorities;

(iii) the statutory bodies;

(iv) the Bank Negara Malaysia; and

(v) such institutions, the capital of which is wholly owned by the


Government of Malaysia, or the governments of the States, or the
local authorities or the statutory body thereof, as may be agreed
upon from time to time between the competent authorities of the
Contracting States;

(b) in the case of Mauritius means the Government of Mauritius and shall
include:

(i) the local authorities;

(ii) the statutory bodies;

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(iii) the Bank of Mauritius; and

(iv) such institutions, the capital of which is wholly owned by the


Government of Mauritius, or the local authorities or the statutory
body thereof, as may be agreed upon from time to time between the
competent authorities of the Contracting States.

6. The term "interest" as used in this Article means income from debt-claims of
every kind, whether or not secured by mortgage, and whether or not carrying a
right to participate in the debtor's profits, and in particular, income from
government securities and income from bonds or debentures.

7. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner
of the interest, being a resident of a Contracting State, carries on business in the
other Contracting State in which the interest arises, through a permanent
establishment situated therein, and the debt-claim in respect of which the interest
is paid is effectively connected with such permanent establishment. In such a
case, the provisions of Article 7 shall apply.

8. Interest shall be deemed to arise in a Contracting State when the payer is that
State itself, a political subdivision, a local authority or a statutory body thereof, or
a resident of that State. Where, however, the person paying the interest, whether
he is a resident of a Contracting State or not, has in a Contracting State a
permanent establishment in connection with which the indebtedness on which
the interest is paid was incurred, and such interest is borne by such permanent
establishment, then such interest shall be deemed to arise in the State in which
the permanent establishment is situated.

9. Where, by reason of a special relationship between the payer and the


beneficial owner or between both of them and some other person, the amount of
the interest paid, having regard to the debt- claim for which it is paid, exceeds the
amount which would have been agreed upon by the payer and the beneficial
owner in the absence of such relationship, the provisions of this Article shall
apply only to the last-mentioned amount. In such case, the excess part of the
payments shall remain taxable according to the laws of each Contracting State,
due regard being had to the other provisions of this Agreement.

Article 12
ROYALTIES

1. Royalties arising in a Contracting State and paid to a resident of the other


Contracting State may be taxed in that other State.

2. However, such royalties may also be taxed in the Contracting State in which
they arise, and according to the laws of that State, but if the recipient is the

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beneficial owner of the royalties, the tax so charged shall not exceed fifteen per
cent of the gross amount of the royalties.

3. The term "royalties" as used in this Article means payments of any kind
received as a consideration for:

(a) the use of, or the right to use, any patent, trade mark, design or model,
plan, secret formula or process, or any copyright or scientific work, or for
the use of, or the right to use, industrial, commercial, or scientific
equipment, or for information concerning industrial, commercial or
scientific experience;

(b) the use of, or the right to use, cinematograph films, or tapes for radio or
television broadcasting, any copyright of literary or artistic work.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of
the royalties, being a resident of a Contracting State, carries on business in the
other Contracting State in which the royalties arise through a permanent
establishment situated therein, and the right or property in respect of which the
royalties are paid is effectively connected with such permanent establishment. In
such a case, the provisions of Article 7 shall apply.

5. Royalties shall be deemed to arise in a Contracting State when the payer is


that State itself, a political subdivision, a local authority or a statutory body
thereof, or a resident of that State. Where, however, the person paying such
royalties, whether he is a resident of a Contracting State or not, has in a
Contracting State a permanent establishment in connection with which the
obligation to pay the royalties was incurred, and such royalties are borne by such
permanent establishment, then such royalties shall be deemed to arise in the
State in which the permanent establishment is situated.

6. Where, by reason of a special relationship between the payer and the


beneficial owner or between both of them and some other person, the amount of
the royalties paid, having regard to the use, right or information for which they are
paid, exceeds the amount which would have been agreed upon by the payer and
the beneficial owner in the absence of such relationship, the provisions of this
Article shall apply only to the last-mentioned amount. In such a case, the excess
part of the payments shall remain taxable according to the laws of each
Contracting State, due regard being had to the other provisions of this
Agreement.

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Article 13
INCOME FROM THE ALIENATION OF PROPERTY

1. Income from the alienation of immovable property, as defined in paragraph 2


of Article 6, may be taxed in the Contracting State in which such property is
situated.

2. Income from the alienation of movable property forming part of the business
property of a permanent establishment which an enterprise of a Contracting
State has in the other Contracting State or of movable property available to a
resident of a Contracting State in the other Contracting State for the purpose of
performing professional services, including such income from the alienation of
such a permanent establishment (alone or together with the whole enterprise)
may be taxed in that other State. However, income from the alienation of ships or
aircraft operated by an enterprise of a Contracting State in international traffic
and movable property pertaining to the operation of such ships or aircraft shall be
taxable only in the State of which the enterprise is a resident.

3. Income from the alienation of any property or assets, other than those
mentioned in paragraphs 1 and 2 of this Article, shall be taxable only in the
Contracting State of which the alienator is a resident.

Article 14
PERSONAL SERVICES

1. Subject to the provisions of Articles 15, 17, 18 and 19 remuneration derived by


an individual who is a resident of a Contracting State in respect of an
employment or a profession shall be taxable only in that State unless the
employment or profession is exercised in the other Contracting State. If the
employment or profession is so exercised, such income as is derived therefrom
may be taxed in that other State.

2. Notwithstanding the provisions of paragraph 1 remuneration derived by an


individual who is a resident of a Contracting State in respect of such employment
or profession exercised in the other Contracting State shall be taxable only in the
first-mentioned State if:

(a) the individual is present in the other State for a period or periods not
exceeding in the aggregate 183 days in the fiscal year concerned; and

(b) the remuneration is paid by, or on behalf of, a person who is not a
resident of the other State; and

(c) The remuneration is not borne by a permanent establishment which the


person paying the remuneration has in the other State.

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3. Notwithstanding the provisions of paragraphs 1 and 2 remuneration in respect


of an employment exercised aboard a ship or aircraft in international traffic
operated by an enterprise of a Contracting State may be taxed in that
Contracting State.

Article 15
DIRECTORS' FEES

Directors' fees and other similar payments derived by a resident of a Contracting


State in his capacity as a member of the board of directors of a company which is
a resident of the other Contracting State, may be taxed in that other State.

Article 16
ARTISTES AND ATHLETES

1. Notwithstanding the provisions of Article 14 income derived by a resident of a


Contracting State as an entertainer, such as a theatre, motion picture, radio or
television artiste, or a musician, or as an athlete, from his personal activities as
such exercised in the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an entertainer or
an athlete in his capacity as such accrues not to the entertainer or athlete himself
but to another person, that income may, notwithstanding the provisions of
Articles 7 and 14, be taxed in the Contracting State in which the activities of the
entertainer or athlete are exercised.

3. The provisions of paragraphs 1 and 2 shall not apply to income derived from
activities exercised in a Contracting State if the visit to that State is directly or
indirectly supported wholly or substantially from the public funds of the other
Contracting State, a political subdivision, a local authority or a statutory body
thereof.

Article 17
PENSIONS AND ANNUITIES

1. Subject to the provisions of paragraph 2 of Article 18, any pensions and other
similar remuneration for past employment or any annuity arising in a Contracting
State and paid to a resident of the other Contracting State shall be taxable only in
that other State.

2. The term "annuity" includes a stated sum payable periodically at stated times,
during life or during a specified or ascertainable period of time, under an
obligation to make the payments in return for adequate and full consideration in
money or money's worth.

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Article 18
GOVERNMENT SERVICE

1. (a) Remuneration, other than a pension, paid by or out of funds created by a


Contracting State or a political subdivision or a local authority or a statutory body
thereof to any individual in respect of services rendered to that State or political
subdivision or local authority or statutory body thereof shall be taxable only in
that State.

(b) However, such remuneration shall be taxable only in the other Contracting
State if the services are rendered in that other State and the recipient is a
resident of that other State who:

(i) is a national of that State, or

(ii) did not become a resident of that State solely for the purpose of
performing the services.

2. Any pension paid by, or out of funds created by, a Contracting State, a political
subdivision or a local authority or a statutory body thereof to any individual in
respect of services rendered to that State, political subdivision, local authority or
statutory body thereof shall be taxable only in that State.

3. The provisions of Articles 14, 15 and 17 shall apply to remuneration or


pensions in respect of services rendered in connection with any trade or
business carried on by a Contracting State, a political subdivision or a local
authority or a statutory body thereof.

Article 19
STUDENTS AND TRAINEES

1. An individual who is or was a resident of a Contracting State immediately


before making a visit to the other Contracting State and is temporarily present in
the other State solely:

(a) as a student at a recognised university, college, school or other similar


recognised educational institution in that other State;

(b) as a business or technical apprentice; or

(c) as a recipient of a grant, allowance or award for the primary purpose of


study, research or training from the government of either State or from a
scientific, educational, religious or charitable organisation or under a
technical assistance programme entered into by the Government of
either State, shall be exempt from tax in that other State on:

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(i) all remittances from abroad for the purposes of his maintenance,
education, study, research or training;

(ii) the amount of such grant, allowance or award; and

(iii) any remuneration not exceeding US 3,000 dollars per annum in


respect of services in that other State provided the services are
performed in connection with his study, research or training or are
necessary for the purposes of his maintenance.

Article 20
TEACHERS AND RESEARCHERS

1. An individual who is a resident of a Contracting State immediately before


making a visit to the other Contracting State, and who, at the invitation of any
university, college or other similar educational institution, visits that other State
for a period not exceeding two years in the aggregate or otherwise from the date
of his first assumption of duty in that other State solely for the purpose of
teaching or research or both at such educational institution shall be exempt from
tax in that other State on any remuneration for such teaching or research which
is subject to tax in the first-mentioned Contracting State.

2. This Article shall not apply to income from research if such research is
undertaken primarily for the private benefit of a specific person or persons.

Article 21
INCOME NOT EXPRESSLY MENTIONED

Items of income of a resident of a Contracting State which are not expressly


mentioned in the foregoing Articles of this Agreement shall be taxable only in that
Contracting State except that if such income is derived from sources in the other
Contracting State, it may also be taxed in that other State.

Article 22
ELIMINATION OF DOUBLE TAXATION

1. Subject to the laws of Malaysia regarding the allowance as a credit against


Malaysian tax of tax payable in any country other than Malaysia, Mauritius tax
payable under the laws of Mauritius by a resident of Malaysia in respect of
income derived from Mauritius shall be allowed as a credit against Malaysian tax
payable in respect of that income. Where such income is a dividend paid by a
company which is a resident of Mauritius to a company which is a resident of
Malaysia and which owns not less than ten per cent of the voting shares of the
company paying the dividend, the credit shall take into account the Mauritius tax
payable by that company in respect of its income out of which the dividend is

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paid. The credit shall not, however, exceed that part of the Malaysian tax, as
computed before the credit is given, which is appropriate to such item of income.

2. For the purposes of paragraph 1 and subject to paragraph 3, the term


"Mauritius tax payable" shall be deemed to include any amount which would
have been payable as Mauritius tax for any year but for an exemption or
reduction of tax granted for that year, or any part thereof, in accordance with this
Agreement and under the laws of Mauritius in respect of incentives provided to
an enterprise with a view to promoting economic development under or by virtue
of any other law which may subsequently come into operation and agreed by the
competent authorities of the Contracting States as having its main object the
promotion of economic development.

3. Credit against Malaysian tax shall not be given by virtue of this paragraph in
respect of income of an enterprise if the income arises in a period starting more
than ten years after the exemption from, or reduction of, Mauritius tax was first
granted to that enterprise in respect of that income.

4. In the case of Mauritius:

(a) Subject to the other sub-paragraphs of this paragraph and to the provisions of
the laws of Mauritius regarding the allowance as a credit against Mauritius tax of
tax payable in a territory outside Mauritius (which shall not affect the general
principle hereof), where a resident of Mauritius derives profits, income or gains
from sources within Malaysia and which, under the law of Malaysia and in
accordance with the Agreement are taxable or may be taxed in Malaysia,
whether directly or by deduction, Mauritius shall allow as a credit against any
Mauritius tax computed by reference to the same profits, income or gains by
reference to which Malaysian tax payable is computed.

(b) In the case of a dividend, the credit referred to in sub-paragraph (a) shall only
take into account such tax in respect thereof as is additional to any tax payable in
Malaysia by the company on the profits out of which the dividend is paid and is
ultimately borne by the recipient of the dividend without any reference to any tax
so payable.

(c) Where a company which is a resident of Malaysia pays a dividend to a


company which is a resident of Mauritius and which controls directly or indirectly
at least ten per cent of the voting power of the company paying the dividend, the
credit shall take into account (in addition to any Malaysian tax for which credit
may be allowed under the provisions of subparagraphs (a) and (b) of this
paragraph) the Malaysian tax payable by the first-mentioned company in respect
of the profits out of which such dividend is paid.

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(d) The credit under this paragraph shall not exceed that part of the Mauritius tax
computed before the credit is allowed and which is appropriate to such item of
income.

5. For the purposes of paragraph 4, the term "Malaysian tax payable" shall be
deemed to include Malaysian tax which would, under the laws of Malaysia and in
accordance with this Agreement, have been payable on any income derived from
sources in Malaysia had the income not been taxed at a reduced rate or
exempted from Malaysian tax in accordance with the provisions of this
Agreement and

(a) the special incentives under the Malaysian laws for the promotion of
economic development of Malaysia or any other provisions which may
subsequently be introduced in Malaysia in modification of, or in addition
to, those laws so far as they are agreed by the competent authorities of
the Contracting States to be of a substantially similar character; and

(b) interest to which paragraph 3 of Article 11 applies had that interest not
been exempted from Malaysian tax in accordance with that paragraph.

6. For the purposes of paragraph 4, where royalties derived by a resident of


Mauritius are, as film rentals, subject to cinematograph film-hire duty in Malaysia,
that duty shall be deemed to be Malaysian tax.

Article 23
MUTUAL AGREEMENT PROCEDURE

1. Where a resident of a Contracting State considers that the actions of one or


both of the Contracting States result or will result for him in taxation not in
accordance with this Agreement, he may, notwithstanding the remedies provided
by the taxation laws of those States, present his case to the competent authority
of the State of which he is a resident. The case must be presented within three
years from the first notification of the action resulting in taxation not in
accordance with the provisions of the Agreement.

2. The competent authority shall endeavour, if the objection appears to it to be


justified and if it is not itself able to arrive at an appropriate solution, to resolve
the case by mutual agreement with the competent authority of the other
Contracting State, with a view to the avoidance of taxation which is not in
accordance with the Agreement.

3. The competent authorities of the Contracting States shall endeavour to resolve


by mutual agreement any difficulties or doubts arising as to the interpretation or
application of the Agreement. They may also consult together for the elimination
of double taxation in cases not provided for in the Agreement.

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4. The competent authorities of the Contracting States may communicate with


each other directly for the purposes of reaching an agreement in the sense of the
preceding paragraphs.

Article 24
EXCHANGE OF INFORMATION

1. The competent authorities of the Contracting States shall exchange such


information as is necessary for the carrying out of the provisions of this
Agreement or for the prevention or detection of evasion or avoidance of taxes
covered by this Agreement. Any information so exchanged shall be treated as
secret and shall be disclosed only to persons or authorities (including a court or
reviewing authority) concerned with the assessment, collection, enforcement or
prosecution in respect of, or the determination of appeals in relation to, the taxes
which are the subject of the Agreement.

2. In no case shall the provisions of paragraph 1 be construed so as to impose


on a Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws or the
administrative practice of that or of the other Contracting State;

(b) to supply particulars which are not obtainable under the laws or in the
normal course of the administration of that or of the other Contracting
State;

(c) to supply information which would disclose any trade, business,


industrial, commercial or professional secret or trade process, or
information the disclosure of which would be contrary to public policy.

Article 25
DIPLOMATIC AND CONSULAR OFFICERS

Nothing in this Agreement shall affect the fiscal privileges of diplomatic or


consular officers under the general rules of international law or under the
provisions of special agreements.

Article 26
ENTRY INTO FORCE

1. This Agreement shall be ratified by the Governments of the Contracting States


and the instruments of ratification shall be exchanged ( at ………………. ) as
soon as possible.

2. This Agreement shall enter into force upon the exchange of the instruments of
ratification and shall have effect:

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(a) in Malaysia:

in respect of Malaysian tax for the year of assessment beginning on the


first day of January 1991, and subsequent years of assessment;

(b) in Mauritius:

in respect of income tax for the year of assessment beginning on the first
day of July 1991, and subsequent years of assessment.

Article 27
TERMINATION

This Agreement shall remain in effect indefinitely, but either Contracting State
may terminate the Agreement, through diplomatic channels, by giving to the
other Contracting State written notice of termination on or before June 30th in
any calendar year after the year 1997. In such an event the Agreement shall
cease to have effect:

(a) in Malaysia:

in respect of Malaysian tax for year of assessment beginning on or after


1 January in the calendar year next following that in which the notice is
given;

(b) in Mauritius:

in respect of income tax for any year of assessment beginning on or after


1 July in the calendar year next following that in which the notice is
given.

IN WITNESS whereof the undersigned, duly authorised thereto, by their


respective Governments, have signed this Agreement.

DONE in duplicate at Kuala Lumpur this 23rd day of August one thousand nine
hundred and ninety two, each in Bahasa Malaysia and the English language, the
two texts being equally authoritative. In the event of there being a dispute in the
interpretation and the application of this Agreement, the English text shall prevail.

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PROTOCOL

At the time of signature of the Agreement between the Government of Malaysia


and the Government of Mauritius for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income, the undersigned
have agreed that the following provision shall form an integral part of the
Agreement. In connection with Article 14 (Personal Services) in as much as the
Mauritius Income Tax Act provides emolument relief to persons in employment or
in receipt of pensions the word "remuneration" shall not be deemed, for the
purposes of the granting of the emolument relief, to include emolument derived
from any source other than employment and pension.

Done at Kuala Lumpur this 23rd day of August one thousand nine hundred and
ninety two in duplicate, in the Bahasa Malaysia and the English language, both
texts being equally authoritative.

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